The Australian Dollar’s Current Status
- The Australian Dollar is hovering near its two-month low, recorded at 0.6414 on Thursday.
- AUD/USD is facing downward pressure as the US dollar gains strength following S&P Global’s US PMI data release.
- The CME FedWatch tool indicates a 74% likelihood of interest rate cuts occurring in September, down from 82% just a day prior.
The Australian Dollar (AUD) has remained steady at around 0.6414, which is close to the two-month low, after experiencing four consecutive days of losses. It seems that the AUD/USD pair has struggled as the US dollar (USD) strengthened following the release of the S&P Global US PMI data. The AUD also faced challenges due to consumer inflation expectations rising by 3.9% in August, a significant drop from the previous 4.7% increase.
The preliminary S&P Global US composite PMI improved in August, rising from 55.1 to 55.4. The US manufacturing PMI also surged from 49.8 to 53.3, surpassing the anticipated 49.5. Meanwhile, the service PMI slightly declined from 55.7 to 55.4 but was still above expectations of 54.2.
Traders are anticipating that the Reserve Bank of Australia (RBA) will proceed cautiously after cutting interest rates last week. Nevertheless, there’s a general expectation that central banks may resume easing in November with a projected 50 basis point cut.
US Dollar Stability Before Powell’s Speech
- The US Dollar Index (DXY), which tracks the USD against six major currencies, shows stability, trading around 98.60 after gains in the previous session. Traders are waiting for Chairman Jerome Powell’s speech at the Jackson Hole Symposium for insights on September’s policy direction.
- Initial claims for unemployment benefits in the US rose to 235K in the previous week, surpassing the consensus estimate of 225K, which suggests a slight softening in labor market conditions.
- The strong PMI data alongside rising jobless claims presents a challenge for the Federal Reserve, which must assess ongoing inflation pressures amidst weakening labor market indicators. The CME FedWatch tool has shifted from indicating an 82% chance to 74% for interest rate cuts in September.
- Chicago Federal Reserve President Austan Goolsbee remarked that actions in September are still on the table, citing mixed economic signals. Similarly, Boston Fed President Susan Collins acknowledged the potential for cuts in September, considering persistent headwinds and labor market softness.
- Minutes from the Federal Open Market Committee (FOMC) meeting held on July 29-30 revealed that most officials believed inflation risks currently outweighed labor market concerns, leading to ongoing divisions among policymakers. There was a consensus to maintain benchmark interest rates in the 4.25% to 4.50% range.
- According to CNN, White House Press Secretary Karoline Leavitt announced plans for a bilateral meeting between Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy.
- U.S. Treasury Secretary Scott Bessent mentioned that discussions between the US and China are progressing well, expressing optimism for a recovery in US growth in the fourth quarter. He added that the current trade arrangements are notably effective, as China is a significant contributor to tariff revenue.
- Australia’s S&P Global Manufacturing PMI improved to 52.9 in August, while the service PMI climbed from 54.1 to 55.1. The composite PMI similarly rose from 53.8 to 54.9.
- Consumer confidence in Australia, as measured by Westpac, increased by 0.6% in July and surged by 5.7% in August to reach 98.5. Confidence has remained high since February 2022 amid a total of 75 basis points raised by the RBA since January.
- Matthew Hassan, head of macro forecasting in Australia, stated that the prolonged consumer pessimism may be coming to an end, but additional measures might be needed to sustain this momentum. Nonetheless, he emphasized that there is no urgent pressure on policymakers for further reductions.
- The RBA is anticipated to cut interest rates by 25 basis points in the upcoming Tuesday meeting, potentially lowering the official cash rate to 3.60% from 3.85%.
Australian Dollar Nears Two-Month Low
The AUD/USD pair is positioned around 0.6420 as of Friday. A look at the daily chart suggests the pair is below the nine-day exponential moving average (EMA), indicating a weakening short-term price momentum. The 14-day relative strength index (RSI) is also beneath the 50 level, which points towards a bearish market sentiment.
On the downside, the AUD/USD pair aims for the two-month low of 0.6414 recorded on August 21, with a further support level at a three-month low of 0.6372 seen on June 23.
For resistance, the AUD/USD pair is targeting the major barrier presented by the nine-day EMA at 0.6461, followed by a 50-day EMA at 0.6488. A breakout beyond these levels may enhance momentum in both the short and medium term, possibly driving the pair toward monthly highs reached on August 14, and the nine-month high of 0.6625 recorded on July 24.
AUD/USD: Daily Charts
Current Australian Dollar Rates
The following table illustrates today’s changes in the Australian Dollar (AUD) against major currencies, where the AUD is relatively weaker compared to the US dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.15% | 0.10% | 0.19% | 0.03% | 0.11% | 0.24% | 0.23% | |
| EUR | -0.15% | -0.02% | 0.03% | -0.11% | -0.09% | 0.10% | 0.10% | |
| GBP | -0.10% | 0.02% | 0.04% | -0.09% | -0.07% | 0.14% | 0.12% | |
| JPY | -0.19% | -0.03% | -0.04% | -0.17% | -0.09% | -0.02% | -0.02% | |
| CAD | -0.03% | 0.11% | 0.09% | 0.17% | 0.03% | 0.21% | 0.21% | |
| AUD | -0.11% | 0.09% | 0.07% | 0.09% | -0.03% | 0.20% | 0.18% | |
| NZD | -0.24% | -0.10% | -0.14% | 0.02% | -0.21% | -0.20% | -0.01% | |
| CHF | -0.23% | -0.10% | -0.12% | 0.02% | -0.21% | -0.18% | 0.00% |
The heatmap indicates the rate changes of each major currency relative to the Australian dollar. You can see how the AUD performs against others based on various metrics.
